Oil prices driven up by futures bets, but market remains bloated

"Given its standing as an global crude marker, this rebalancing is expected to provide a greater degree of price support for Brent compared to its US peer", he said in a daily emailed newsletter.

For the United States and Russian Federation, total petroleum and natural gas hydrocarbon production in energy content terms is nearly evenly split between petroleum and natural gas, while Saudi Arabia's production heavily favors petroleum.

Crude oil markets looked to future support with bargain hunters looking to wade back in Monday after last week's loss of the $50 per barrel floor.

"Stocks of refined products have also improved in the last week".

The U.S. West Texas Intermediate crude July contract was at $45.70 a barrel by 3:10AM ET (0710GMT), down 13 cents, or around 0.3%.

While over in the United States, commercial crude inventories recorded their steepest decline since December 2016 last week in late May, falling by 6.4 million barrels amid record refinery runs and lower USA imports.

The United States retained its position despite decreases in both petroleum and natural gas production compared to 2015 levels.

In the long term, Martin believes US shale and OPEC can survive when demand is strong and where mature field decline in conventional production is accelerating: "Arguably, oil prices will need to accelerate this process, but in doing so a return to sub $40 per barrel may yet be unavoidable".

Oil prices rose on Monday as futures traders bet the market may have bottomed after a recent steep fall, even as physical markets remain bloated by oversupply, especially from a relentless rise in US drilling.

As SGS alluded to in a Monday research note, Saudi Arabia has more skin in the pricing game than most with a highly anticipated IPO of Saudi Aramco slated for 2018.

OPEC President Qatar's Energy Minister Mohammed bin Saleh al-Sada and OPEC Secretary General Mohammad Barkindo address a news conference after a meeting of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna, Austria, November 30, 2016. OPEC liquid fuels production, which was 39.0 million b/d in 2017, is forecast to be 39.2 million b/d in 2017 and 39.9 million b/d in 2018.

Russia, not a member of OPEC, is the world's biggest oil producer but it is participating in the production cuts. In November 2016, OPEC had agreed to production cuts that would last through the first half of 2017.